Canadian Jobs Lost to the Tar Sands

Just because something is a bit complicated, it doesn't mean you can ignore it, especially when it's hurting you.

And yet, this appears to be the case with the loss of hundreds of thousands of manufacturing jobs in the past several years -- 627,000 by one measure -- mostly in Ontario and Quebec where these jobs have historically existed.

The phenomenon even has a name already: "Dutch Disease." Canada now has a bad case of it, yet you won't hear the government in Ottawa talk about it, since that would run counter to its blinkered agenda of accelerating the strip mining of Northern Alberta to push more oil through pipelines to China and America.

The term "Dutch Disease" was coined in the 1970s after the Netherlands discovered a large natural gas field. The country's exchange rate became tied to the rising price of natural gas, pricing its manufacturing goods out of international markets and leading to job losses.

In 2011, the Canadian dollar traded on average above the U.S. dollar for the first time since 1976. This puts an extra burden on Canadian companies who export, since it makes their products less competitive versus products from other countries.

While experts will tell you there are various factors behind our exchange rate, it's hard not to see the close correlation between the price of oil and the exchange rate, charted in a graph here. Thanks to increased oil production, we now have a petro-dollar that rises and falls with the price of oil.

And, with oil being a finite commodity, its price will only rise, taking our dollar and manufacturing jobs in Ontario and Quebec along with it.

How many? One economist at the University of Ottawa has estimated that 42 per cent of manufacturing job losses in recent years are due to Canada's case of Dutch Disease. Another study out of Montreal points out that while 95 per cent of Canada's oil reserves are in Alberta, 75 per cent of Canada's manufacturing output is located in Eastern Canada, making this a growing issue of regional fairness.

So when you hear boosters argue how great the tar sands are for the Canadian economy, it's a new kind of snake oil, this time of the viscous and toxic kind called "bitumen."

If we were at all serious about both regional economic fairness and about charting a new economic future that isn't based on trashing our planet, we'd reverse the growth of tar sands production and instead invest heavily in the ample renewable energy resources that exist all across the country.

For now, though, leaders in Ontario and Quebec need to recognize the reality of Canada's Dutch Disease and stand up for their citizens by working to pull Ottawa's head out of the tar sands. Their economies depend on it.